Equities End Flat On Thursday; Apple And Google Shares Both Down

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The S&P 500 and Nasdaq both ended a shade above 0.01% while the Dow dropped 0.15%. This was the sixth straight day that the Dow declined.

Both Apple (AAPL) and Google (GOOG) headed south as well. Investors were hoping that Apple’s unveiling of the new iPad would excite investors; however, iPad sales have stagnated recently as consumers tend to keep their tablets longer than other products like smartphones. Google announced its Q3 earnings today, which was just shy of analyst estimates. Most troubling to investors perhaps was that Google posted a slowdown in the total number of ads, or paid clicks, in the three months that ended Sept. 30.

It seems that the general mood of the market remains pessimistic, despite a fresh plate of good economic news including a Labor Department report that initial jobless claims had fallen to a seasonally adjusted 264,000 last week – lowest in 14 years. Separately, the Federal Reserve said September industrial output rose 1%, the largest jump since May 2010, offsetting fears that the U.S. economy was being crimped by slowing growth abroad.

While there are plenty of forecasts as to where the indexes will go, some technicians predict an S&P 500 drop to the 1,770 area if the 1,900 level does not get conquered by a week from Friday. We will watch safely from the sidelines to see if there is more downside to come.

6 of our 10 ETFs in the Spotlight managed to close slightly higher, however, we remain on the sidelines with our TTIs being stuck in bearish territory. Please see section 3 for more details.

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Markets Move Down Sharply; Damage Is Limited Thanks To Late Day Rally

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Well, volatility continued to shake markets today as the S&P 500 fell 0.84%, the Dow dropped 1.06% and the Nasdaq declined 0.29%. It could have been a lot worse, as the Dow was down at one point by some 400 points. However, there were six stocks in the Dow that posted notable gains: Johnson & Johnson (JNJ) and General Electric (GE) being two of them.

Airline stocks took a hit today amidst growing concerns over the Ebola virus and global economic uncertainty. United Continental (UAL), Delta (DAL) and American Airlines (AAL) all fell more than 4%. Several carriers saw record profits in the previous quarter, however, as you can see, there are other points of focus for investors in the wider scheme of things.

A bit of interesting news came in from Lockheed Martin Corp, who said today that it had made a technological breakthrough in developing a power source based on nuclear fusion. If it proves feasible, Lockheed’s work would mark a key breakthrough in a field that scientists have long eyed as promising, but which has not yet yielded viable power systems. Tom McGuire, who heads the project, said that the first reactors, which could be ready in ten years, would be small enough to fit on the back of a truck.

With the markets continuing to slide deeper into bear market territory, investors hope that favorable upcoming earnings reports can keep the indexes from diving too. For the time being, cash is king!

All of our 10 ETFs in the Spotlight joined the downward trend and closed lower.

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Rally Attempt Fails Miserably; But No Major Drops As Markets Run Out Of Time

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks rallied early in the day, but the momentum faded by closing time as investors remained jittery about global economic growth, conflict abroad and now ebola at home. This could have ended up to be a negative day had time not run out.

Ebola has had quite an impact on the human condition over the past month, but some investors are realizing some hefty gains on the disease. Lakeland Industries (LAKE) and Alpha Pro Tech (APT) make hazmat suits, which are full body suits that healthcare workers wear when treating diseased patients. Lakeland’s stock is one of the biggest gainers since the breakout of ebola, jumping up from $7 a month ago to as high as $28 and settling today at $21.43. Other manufacturers of these suits include DuPont (DD), Kimberly Clark Corp (KMB), and Honeywell International Inc. (HON).

With Black Friday around the corner, Macy’s (M) made the first aggressive move to seek higher profits, as it announced today that they will open stores earlier this year, at 6 pm on Thanksgiving to be exact. Macy’s is the first major retailer to announce store hours for the Black Friday weekend.

Finally, oil took a big hit today, as the International Energy Agency cut its demand forecasts for 2014 and 2015 by 200,000 and 300,000 barrels per day, respectively. Perhaps, this means a continued decline in prices at the pump.

With the markets having been on a breathtaking roller coaster ride, it’s better to be safe than sorry. Just today I saw a comment from a seasoned investor on another blog that described the current situation very well:

In the past 5 days, I’ve hit 15 of my trailing stops. I just placed another batch of sell orders. All I have left is mostly cash, precious metals, and bonds. I had a lot of energy MLPs in my taxable account and they have been massacred – oil, gas, coal, midstream – everything. Buy-write funds ditto [funds that use a covered-call options strategy]. I have a few stocks left, but it’s pretty skimpy.

But one thing I’ve learned to never ignore: trailing stops despite fear of a whipsaw. I have always regretted waiting.

There is a lesson in his comment.

7 of our 10 ETFs in the Spotlight managed to eke out a small gain as the mid-day rally shifted in reverse.

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Downward Trend Accelerates; Domestic Sell Signal Generated

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks resumed their recent trend of spiraling downward to begin this week. A late-day selloff on Wall Street smashed hopes for a rebound rally after last week’s plunge, which pushed major indexes closer to a 10% correction. All major indexes slipped as the chart above shows. As a side note, this marked the Dow’s fifth straight triple-digit move, of which only one of them was positive!

In tech, GoPro (GPRO) dropped 8% today on reports that a retired race car driver sustained serious head injuries while wearing one of the company’s cameras skiing last year. As you may know, the stock has been on a rapid uptrend since its IPO earlier this year. GoPro cameras are often mounted on the top of helmets worn by extreme sports enthusiasts.

In the air, Boeing (BA) announced on Sunday that it received a massive order from Guarda Indonesia for 50 jets that amounted to a purchase price of $4.9 billion. Garuda Indonesia currently operates 77 Boeing 737s. Specifically, the airline will purchase 46 737 MAX 8s and will convert existing orders for four Next-Generation 737-800s to 737 MAX 8s. The first delivery of a 737 Max to an airline is scheduled for 2017.

Anxiety on Wall Street has been accelerated by continued uncertainty about how markets will react as the Fed nears the expected end of its market-friendly bond- buying program later this month and plots its first interest rate hike sometime next year. Also, the increased presence of Ebola in the U.S. is not helping market uncertainties.

All of our 10 ETFs in the Spotlight headed south as the move into bear market territory intensified. For more details please see section 3 below.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/10/2014

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 398 ETFs, of which currently 121 (last week 195) are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 97 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 17 ETFs (last week 31) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 155 (last week 514) above the line and 695 below it out of the 850 that I follow.

Take a look:

1. ETF Master Cutline Report     

2. ETF High Volume Cutline Report

3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

One Man’s Opinion: Can The US Economy Grow At A Robust Pace Despite Global Weakness?

Ulli Market Review Contact

92835431The International Monetary Fund recently slashed global growth forecast amid slowdown in Europe and weakness in Japan. But lackluster global growth is unlikely to snuff-out the US bright spot, said Rick Reider, chief investment officer for fixed-income at BlackRock Inc.

The US economy is moving in a pretty robust fashion with energy and technology driving growth. A bottomed out housing market and a largely deleveraged system only adds to the positives. The economy has grown by about 3.8-3.9 percent in the second and the third quarter, which is far higher than the 10-year average of 1.6 percent. With unemployment rate at 5.9 percent, the Fed can make a move as most data point indicates these are not unusual times, he explained.

Asked to explain the conundrum of a falling unemployment rate and a falling labor participation rate that is pushing up the long-term unemployment rate, Rick said aggregate data generally gives good indications about the health of the economy. The US is essentially enduring a two-speed economy now. The skilled workers are doing exceedingly well while the less-skilled workforce is falling behind. The aggregate data shows things are improving though there is a bifurcation that is difficult to miss, he noted.

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